During the 2012 campaign, Romney was excoriated because he and his wife paid an effective federal tax rate of 14 percent. This was ridiculed as being a lower rate than "Warren Buffett's secretary." It was also Exhibit A in President Barack Obama's drive to enact a 30 percent minimum income tax.

Fast forward this month when President and Mrs. Obama released their 2012 tax return. Lo and behold, on gross income of $662,000, the Obama's owed $122,000 in federal income, self-employment, Social Security and Medicare taxes. Effective tax rate: 18.5 percent.

How did millionaires like the Obamas manage this?

First, the Obamas reduced their gross income via a $50,000 retirement plan contribution. A deduction of this size was made possible by the President's self-employment income as an author. Those who are employed by others have much lower contribution limits.

This retirement contribution reduced the Obamas' current tax burden by some $17,500.

The Obamas then reduced their adjusted gross income through $258,000 in itemized deductions, the largest of which was a very generous $150,000 in charitable contributions. In 2012, itemized deductions -- before alternative minimum tax considerations -- saved "one-percenters" like the Obamas about 35 cents in tax for every dollar spent on charity, state and local taxes, mortgage interest, etc. Deductions are less valuable in lower tax brackets and have no value at all for those taking the standard deduction.

President Obama has been sharply critical of the tax benefits associated such deductions. This did not stop taxpayer Obama from using them in full to reduce his family's taxes by some $86,000.

What can we learn from the Obamas' tax return?

First, hypocrisy reigns supreme. The Obamas could have set an example and paid 30 percent of their income in taxes. A Treasury Department program called "Gifts to reduce the debt" is designed to accept contributions from those who don't feel they are paying their fair share. This program has taken in less than $4 million per year during Obama's presidency.

Second, the tax system is ridiculously complicated. The Obamas lead a relatively simple financial life. They have two main sources of income -- book royalties and federal salary. They also had interest on a U.S. Treasury security that came due. For this, they had to fill out Form 1040, Schedule A itemized deductions, Schedule B interest income, Schedule C business income, Schedule D capital gains, Form 8949 capital gains, Schedule SE self-employment tax, Form 1116 foreign tax credit, Form 1116 foreign tax credit using alternative minimum tax, Form 6251 alternative minimum tax and Form 2210 underpayment of taxes.

Third, it is clear that the tax code can be simplified and tax rates lowered without reducing tax revenue. For example, a 25 percent flat tax on all income above $100,000 would have raised more money from the Obamas than the current code with a fraction of the record-keeping and filing requirements.